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2020 (8) TMI 305 - AT - Income TaxCapital gain computation - Assessment order framed by the AO u/s 143(3) as erroneous insofar prejudicial to the interest of revenue - AO power to substitute the value shown by the assessee as on 1 April 1981 under the provisions of section 55A - making reference or substituting the value shown by the assessee as on 1 April 1981 - HELD THAT - From the provisions of section 55A reveals that the AO can substitute the value shown by the assessee as on 1 April 1981 if he has shown less value whereas the assessee in the present case has shown the higher value. Thus the question of making reference or substituting the value shown by the assessee as on 1 April 1981 in the given facts and circumstances does not arise. There was an amendment under the provisions of section 55A where the word variance was inserted but such amendment is applicable with effect from 01-07-2012 which is prospective in nature. Thus amended provisions cannot be applied in the year under consideration. Accordingly, we do not find any infirmity in the assessment order framed under section 143(3) of the Act. Accordingly we hold that the order framed under section 263 of the Act is not sustainable and hence we quashed the same. Thus the ground of appeal of the assessee is allowed.
Issues Involved:
1. Whether the assessment order framed by the Assessing Officer (AO) under section 143(3) was erroneous and prejudicial to the interest of revenue. 2. The applicability of section 55A of the Income Tax Act, 1961, regarding the valuation of capital assets. 3. The impact of the amendment to section 55A effective from 01-07-2012 on the assessment year under consideration. 4. The procedural aspect of pronouncing the order beyond the stipulated 90 days due to Covid-19 lockdown. Detailed Analysis: Issue 1: Erroneous and Prejudicial Assessment Order The primary issue raised by the assessee was that the learned Commissioner of Income Tax (CIT) erred in holding the assessment order framed by the AO under section 143(3) as erroneous and prejudicial to the interest of the revenue. The CIT found defects in the assessment, particularly in the valuation of a piece of land purchased by the assessee. The land was bought on 11 March 1981 for ?24,701 and valued at ?5,50,000 as of 1 April 1981 for capital gain purposes. The CIT questioned this substantial increase in value within a short span and directed the AO to take the value as ?24,701 while calculating the capital gain. Issue 2: Applicability of Section 55A The assessee contended that under section 55A of the Act, the AO has no power to substitute the value shown by the assessee if it is higher than its fair market value. The tribunal noted that section 55A allows the AO to refer the valuation to a Valuation Officer if the value claimed by the assessee is less than its fair market value. In this case, since the assessee had shown a higher value, the question of substituting the value or making a reference did not arise. Issue 3: Amendment to Section 55A The tribunal referred to the judgment of the Hon’ble Jurisdictional High Court in the case of CIT vs. Gauranging S. Sodhan Indl., which clarified that prior to the amendment effective from 01-07-2012, the AO could not substitute the value if it was higher than the fair market value. The amendment introduced the term "variance" but was applicable prospectively from 01-07-2012. Therefore, the amended provisions could not be applied to the assessment year under consideration (2009-10). Issue 4: Pronouncement of Order Beyond 90 Days The tribunal acknowledged the extraordinary circumstances due to the Covid-19 pandemic, which led to delays in pronouncing the order. Citing the Hon’ble Mumbai Tribunal in the case of JSW Limited Vs Deputy Commissioner of Income Tax, it was noted that the lockdown period should be excluded while computing the 90-day period for pronouncement of orders. The tribunal emphasized that the unprecedented situation warranted a pragmatic approach, extending the time limit for pronouncement. Conclusion: The tribunal held that the assessment order framed under section 143(3) was not erroneous and prejudicial to the interest of the revenue. The provisions of section 55A, as applicable for the year under reference, did not permit the AO to substitute the value shown by the assessee. The amendment to section 55A was prospective and not applicable to the assessment year in question. Consequently, the order under section 263 of the Act was quashed, and the appeal filed by the assessee was allowed. The tribunal also justified the delay in pronouncing the order due to the Covid-19 lockdown. Final Pronouncement: The appeal filed by the assessee was allowed, and the order was pronounced in the open court on 02-06-2020.
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